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									                                              Federal Direct Consolidation Loan
                                              Borrower’s Rights and Responsibilities


The William D. Ford Federal Direct Loan (Direct Loan)                2a. The following subsidized loans will be
Program includes the following Direct Loans:                         consolidated under one loan identification number:

  s   Federal Direct Stafford/Ford Loans (Direct Subsidized            s   Subsidized Federal Stafford Loans
      Loans)                                                           s   Guaranteed Student Loans (GSL)
  s   Federal Direct Unsubsidized Stafford/Ford Loans                  s   Federal Insured Student Loans (FISL)
      (Direct Unsubsidized Loans)                                      s   Federal Direct Stafford/Ford Loans
  s   Federal Direct PLUS Loans (Direct PLUS Loans)                    s   Federal Direct Subsidized Consolidation Loans
  s   Federal Direct Consolidation Loans (Direct Consolida-            s   Federal Perkins Loans
      tion Loans)                                                      s   National Direct Student Loans (NDSL)
                                                                       s   National Defense Student Loans (NDSL)
                                                 ,
The Direct Loan Program is authorized by Title IV Part D, of           s   Subsidized Federal Consolidation Loans
the Higher Education Act of 1965, as amended (the Act).
                                                                     2b. The following unsubsidized loans will be consolidated
A Direct Loan is made by the United States Government and            under one loan identification number:
is administered by the U.S. Department of Education (ED).
ED’s Direct Loan Servicing Center will manage, answer                  s   Unsubsidized Federal Stafford Loans (including Non-
questions about, and collect my loan. I will be provided with              Subsidized Stafford Loans made prior to 10/1/92)
the address and telephone number of the Direct Loan                    s   Federal Supplemental Loans for Students (SLS)
Servicing Center when my Direct Consolidation Loan is                  s   Unsubsidized Federal Consolidation Loans
made.                                                                  s   Federal Direct Unsubsidized Consolidation Loans
                                                                       s   Federal Direct Unsubsidized Stafford/Ford Loans
1. Change of Status. Under federal law, I must notify the              s   Auxiliary Loans to Assist Students (ALAS)
Direct Loan Servicing Center, in writing, if any of the                s   Health Professions Student Loans (HPSL)
following events occurs before my loan is repaid:                      s   Health Education Assistance Loans (HEAL)
  s   I change my address                                              s   Nursing Student Loans (NSL)
  s   I change my name (for example, maiden name to                    s   Loans for Disadvantaged Students (LDS)
      married name)                                                  2c. The following parent PLUS loans (unsubsidized) will
  s   I change my employer or my employer’s address or               be consolidated under one loan identification number:
      telephone number changes
  s   I have any other change in status that would affect my           s   Federal PLUS Loans
      loan (for example, the loss of eligibility for an unem-          s   Parent Loans for Undergraduate Students (PLUS)
      ployment deferment by obtaining a job)                           s   Federal Direct PLUS Loans
                                                                       s   Federal Direct PLUS Consolidation Loans
If I am still in school, I must notify my school’s financial
aid office if any of the following events takes place:               3. Interest Rate. It is my responsibility to pay interest on my
                                                                     loan. Interest will be calculated according to the applicable
  s   I reduce my enrollment status to less than half time           formulas provided for by the Act and/or ED’s regulations.The
  s   I withdraw from school                                         interest rate that applies to my loan will be included in a letter
  s   I stop attending classes                                       that I will receive from the Direct Loan Servicing Center when
  s   I fail to enroll for any term                                  my Direct Consolidation Loan is made.
  s   I have a change in my expected graduation date
  s   I change my name, local address, or permanent address          The interest rate on my Direct Consolidation Loan will be
                                                                     based on the weighted average of the interest rates on the
2. Loan Identification Numbers. My Direct Consolidation              loans being consolidated, rounded to the nearest higher
Loan may have up to three individual loan identification             one-eighth of one percent, but shall not exceed 8.25%. This
numbers.These numbers will be determined and assigned by             is a fixed interest rate, which means that the rate will remain
ED depending on the loan(s) that I have chosen to consoli-           the same throughout the life of the loan.
date. Even if three separate consolidation loan identification
numbers are assigned by ED, I have only one Direct Consoli-          4. Interest Charges. Interest will be charged from the date
dation Loan and will receive only one bill.                          my Direct Consolidation Loan is made. However, for all of the

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loans that I consolidate from Item 2a, ED will not charge               convenience, and I am obligated to make payments even if I
interest on my Direct Consolidation Loan during in-school,              do not receive any notice.
grace, and deferment periods. For all of the loans that I
consolidate from Items 2b and 2c, ED will charge interest on            I will be given the opportunity to choose one of the follow-
my Direct Consolidation Loan during all periods.                        ing loan repayment plans.

ED will charge interest on my Direct Consolidation Loan                 Note: The time periods given for each
during a forbearance period.                                             repayment plan do not include periods
                                                                         of deferment and forbearance.
I must pay any interest charged during an authorized period
of deferment or forbearance or capitalize the unpaid accrued              s   Standard Repayment Plan – If I choose this plan, I
interest by having it added to the loan principal at the end of               will make fixed monthly payments and repay my loan
the deferment or forbearance period, as provided under the                    in full within 10 years from the date the loan entered
Act. If I choose to capitalize unpaid accrued interest, the total             repayment. Payments must be at least $50 a month and
cost of my loan will increase.                                                will be more, if necessary, to repay the loan within the
                                                                              required time period.The amount of the payments may
The Taxpayer Relief Act of 1997 may allow me to claim a
                                                                              be adjusted annually to reflect changes in the variable
federal income tax deduction for interest payments I make
                                                                              interest rate.
on Direct Loans for the first 60 months (whether consecu-
tive or not) that such loans are in repayment.The deduction
                                                                          s   Extended Repayment Plan – If I choose this plan, I
applies to interest payments I make on or after
                                                                              will make fixed monthly payments and repay my loan
January 1, 1998. For further information, I may refer to
                                                                              in full within 12 to 30 years, depending on the total
the Internal Revenue Service (IRS) Publication 970, which is
                                                                              amount of my loan and other allowable education
available at http://www.irs.ustreas.gov.
                                                                              debt. Payments must be at least $50 a month and will
5. Grace Period. My Direct Consolidation Loan will receive                    be more, if necessary, to repay the loan within the
a 6-month grace period before the first payment on my loan                    required time period.The amount of the payments may
must be made if all of the following conditions are met:                      be adjusted annually to reflect changes in the variable
                                                                              interest rate.
  s   I have at least one Direct Loan or attend a Direct
      Loan school,                                                        s   Graduated Repayment Plan – If I choose this plan,
  s   At least one Direct Loan or Federal Family Education                    my payments will be lower at first and will increase,
      Loan (FFEL) Program loan that I am consolidating is                     generally every two years. I will repay my loan within
      in an in-school period, and                                             12 to 30 years, depending on the total amount of the
  s   My application for a Direct Consolidation Loan is                       loan and other allowable education debt. Payments
      received by ED prior to the end of my in-school                         must cover interest charges and can never be less than
      period.                                                                 50 percent or more than 150 percent of the amount I
                                                                              would have paid under the Standard Repayment Plan.
The grace period begins the day after I cease to be enrolled                  The amount of the payments may be adjusted annually
at least half time at an eligible school. (If my enrollment                   to reflect changes in the variable interest rate.
status changes to less than half time after I apply but before
the first disbursement of my Direct Consolidation Loan, I will            s   Income Contingent Repayment Plan – If I choose
not have to make payments on my Direct Consolidation Loan                     this plan, my monthly repayment amount is based on
for the number of months remaining in my grace period at                      the total amount of my loan, my family size, and my
the time the first disbursement is made.)                                     Adjusted Gross Income (and that of my spouse if I am
                                                                              married). Until ED obtains the information needed
My grace period does not include any period up to 3 years
                                                                              from the IRS to calculate my monthly repayment
during which I am called or ordered to active duty for more
                                                                              amount, my payment will equal the amount of the
than 30 days from a reserve component of the Armed Forces
                                                                              interest that has accrued on my loan unless I request
of the United States, including the period necessary for me to
                                                                              a forbearance. As my income changes, my repayment
resume enrollment at the next available regular enrollment
                                                                              amount may change. If I have not repaid my loan after
period.
                                                                              25 years under this plan, the unpaid portion of the
6. Repayment. My first payment will be due within 60 days                     loan is forgiven. I may have to pay income tax on any
of the first disbursement of my Direct Consolidation Loan                     amount forgiven.
unless I meet the conditions outlined in Item 5 or am eligible
for a deferment.                                                        Note: PLUS loans (refer to Item 2c) that are
I must make payments on my loans even if I do not receive a
                                                                         consolidated cannot be repaid under the
bill or repayment notice. Billing information is sent to me as a         Income Contingent Repayment Plan.
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If I do not choose one of the plans, ED will choose a plan for       To apply for a loan discharge due to permanent and total
me in accordance with ED’s regulations. However, if I                disability, I (and my spouse if applicable) must submit a
demonstrate to ED’s satisfaction that the terms and condi-           discharge application to the Direct Loan Servicing Center.
tions of the repayment plans are not adequate to accommo-            The application must be certified by a doctor.
date my exceptional circumstances, ED may provide an
alternative repayment plan.                                          ED will not approve a request for discharge for permanent
                                                                     and total disability for a condition that existed before I
There will be no penalty for prepaying any portion of my             applied for any of the loans that I am consolidating unless a
loan. All payments and prepayments are applied in the                doctor certifies that the condition substantially deteriorated
following order: late charges and fees, and collection costs         after the loan(s) was made rendering me totally and perma-
first, outstanding interest second, and outstanding princi-          nently disabled.
pal last.
                                                                     Under certain circumstances, all or a portion of my Direct
If I fail to make any part of an installment payment within 30       Consolidation Loan debt may be discharged if I am/was
days after it becomes due, I may owe a late charge.This              unable to complete a course of study because my school
charge may not exceed six cents for each dollar of each late         closes/closed or my eligibility was falsely certified by my
installment.                                                         school. The Act also provides for loan discharge in the
                                                                     amount of any required refund that my school fails/failed
7. Consequences of Default. Default (failing to repay                to make.
my Direct Consolidation Loan) is defined in detail in the
disclosure of terms in my promissory note. If I default, the         ED does not vouch for the quality or suitability of
entire unpaid balance and collection fees will become due            academic programs offered by schools participating in
and payable immediately. Failure to repay this or any                any federal student financial aid program. Repaying my
federal student loan may result in any or all of the follow-         loans is not conditional on the performance of the
ing:                                                                 school I attend/attended or on my obtaining employ-
  s   loss of my federal income tax refunds                          ment in my field of study.
  s   legal action against me                                        I may assert, in certain proceedings before ED, that I have a
  s   collection charges (including attorney fees) being             defense against repayment of a Direct Loan. ED may recog-
      assessed against me                                            nize as a defense against repayment an act or omission by the
  s   loss of my eligibility for other federal student aid           school that I am/was attending that would give rise to a legal
  s   loss of my eligibility for loan deferments                     cause of action against the school under applicable State law,
  s   negative credit reports to credit bureaus                      as long as that act or omission directly relates to the loan or
  s   my employer withholding part of my wages to give               to the school’s provision of educational services for which
      them to ED (wage garnishment)                                  the loan is/was provided.
8. Credit Bureau Notification. Information concerning the            My Direct Consolidation Loan will not be discharged
amount, disbursement, and repayment status (current or               automatically in bankruptcy. In order to discharge a loan in
delinquent) of my loan will be reported to one or more               bankruptcy, I must prove undue hardship in an adversary
national credit bureau organizations on a regular basis. If I        proceeding before the bankruptcy court.
default on my loan, this will also be reported to national
credit bureaus. I will be notified at least 30 days in advance       10. Special Repayment Arrangements. If I am a full-
that default information is to be disclosed to a credit bureau       time teacher and at the time I signed the promissory notes
unless I enter repayment on the loan within 30 days. I will be       for the subsidized and unsubsidized student loans that I
given a chance to ask for a review of the debt before it is          am consolidating I had no outstanding balance on a Title
reported. ED must provide a timely response to a request             IV loan made before October 1, 1998, I may be eligible for
from any credit organization regarding objections I might            loan forgiveness. Ed will repay a fixed amount of my
raise with that organization about the accuracy and com-             student loans that I am consolidating if I have worked as a
pleteness of any information ED has reported.                        full-time teacher for 5 consecutive school years, if I am not
                                                                     in default on any such loan, and if I meet all other eligibility
9. Discharge. If I am applying singly for a Direct Consolida-        requirements under the Act.
tion Loan, my loan will be discharged if documentation of my
death is submitted to the Direct Loan Servicing Center or if I       11. Deferments. Under certain circumstances, I am entitled
am eligible under the regulations governing a discharge due          to postpone making payments on my Direct Consolidation
to a permanent and total disability. If I am applying jointly        Loan. Upon request, the Direct Loan Servicing Center will
with my spouse, the death and disability discharges will only        provide me with a deferment application that explains the
apply if both my spouse and I either die or become perma-            eligibility requirements. If I am in default on my Direct
nently and totally disabled.                                         Consolidation Loan, I am not eligible for a deferment.

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If I consolidate my loan(s) jointly with my spouse’s                  Note to Direct PLUS Consolidation Loan
loan(s), we both must meet deferment eligibility criteria at            Borrowers:
the same time in order to postpone making payments on
our Direct Consolidation Loan.                                        You may also be eligible for deferments while the student for
                                                                      whom you borrowed a parent PLUS loan is dependent and:
Deferments are available in the following situations:
                                                                        s   Enrolled at least half time at an eligible school
  s   While I am enrolled at least half time at an eligible             s   Engaged in a full-time graduate fellowship program
      school                                                            s   Engaged in a full-time rehabilitation program for
  s   While I am engaged in a full-time course of study in a                individuals with disabilities (if the program is approved
      graduate fellowship program                                           by ED)
  s   While I am engaged in a full-time rehabilitation training
      program for individuals with disabilities (if the program       The Direct Loan Servicing Center can provide additional
      is approved by ED)                                              information about deferment eligibility.
  s   While I am conscientiously seeking, but unable to find,
      full-time employment (for up to three years)                    12. Forbearance. If I am unable to make my scheduled loan
  s   While I am experiencing an economic hardship                    payments, ED may allow me to reduce my payment amount
      (including Peace Corps service) as defined by federal           or to temporarily stop making payments as long as I intend
      law (for up to three years)                                     to repay my loan. Allowing me to temporarily delay or
                                                                      reduce loan payments is called a forbearance.
The Direct Loan Servicing Center will process an in-
school deferment based on (i) my request along with                   If I am willing, but financially unable, to make payments
documentation verifying my eligibility, or (ii) the Direct            under my repayment schedule, forbearance may be granted
Loan Servicing Center’s receipt of information from my                for circumstances such as:
school about my eligibility in connection with a new loan,              s   financial hardship
or (iii) the Direct Loan Servicing Center’s receipt of                  s   illness
student status information indicating that I am enrolled on             s   service in a medical or dental internship or residency
at least a half-time basis.                                                 program, if I meet specific criteria
In all other cases, I must provide the Direct Loan Servic-              s   service in a national service position for which I
ing Center with a deferment request and evidence that                       receive a national service education award under the
verifies my eligibility.                                                    National and Community Service Trust Act of 1993
                                                                        s   periods of time when my monthly debt burden for all
If, at the time I consolidate my loan(s), I have an outstand-               federal Title IV student loans equals or exceeds 20
ing balance on a FFEL Program loan (formerly known as a                     percent of my total monthly gross income (for up to
GSL) that was made prior to July 1, 1993, additional                        three years)
deferments may be available.These include deferments
while I am:                                                           ED may grant me a forbearance for up to 60 days in order to
                                                                      collect and process documentation supporting my request
  s   Temporarily totally disabled (for up to three years)            for a deferment, forbearance, change in repayment plan, or
  s   Unable to secure employment because I am required               consolidation.
      to care for a spouse or dependent who is temporarily
      totally disabled (for up to three years)                        ED may grant me forbearance to eliminate a delinquency that
  s   Serving in the U.S. Armed Forces, the Commissioned              persists even though I am making scheduled installment
      Corps of the Public Health Service, the National                payments.
      Oceanic and Atmospheric Administration Corps, or                I may contact the Direct Loan Servicing Center for informa-
      the Peace Corps (for up to three years)                         tion on how to apply for forbearance.
  s   Serving as a full-time paid volunteer for a tax-exempt
      organization or an ACTION program (for up to three              13. Subsequent Consolidation. If I do not consolidate all
      years)                                                          eligible loans at this time, I understand that I may consolidate
  s   In a medical internship or residency program (for up            an additional eligible loan(s) by submitting a request to ED
      to two years)                                                   within 180 days after the date on which my Direct Consoli-
  s   Teaching in a designated teacher shortage area (for             dation Loan is made.The Disclosure issued when a subse-
      up to three years)                                              quent consolidation is completed shall be controlling and
  s   On parental leave (for up to six months)                        will include the balance of this Direct Consolidation Loan.
  s   A working mother entering or re-entering the
      workforce (for up to one year)                                  If I want to consolidate an additional eligible loan(s) after this
                                                                      period of time, I will need to apply for a new Direct Consoli-
                                                                      dation Loan.

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